Spydertrader's Jack Hershey Futures Trading Journal

As promised, I have split off the Futures trading Discussion into its own Thread in an effort to minimize the level of confusion between Hershey Equities and Hershey Futures Trading. Jack now refers to Equities as PVT and Futures Trading as SCT. However, we do not concern ourselves with SCT at the present time. In fact, SCT remains far removed from the place where we begin our Journey. While we may consider SCT as our destination, The Journey begins with the FTT (Failure To Traverse).

What is the FTT? And why is it so important? The following posts provide a brief overview of how the FTT operates. Please review the posts (a few times to make sure you have things straight in your mind) before continuing further.

If you havenât read any of the previous Hershey Futures Threads, donât worry. You can quickly catch up. In an effort to get yourself âup to speedâ (so to speak), review the end of Journal Two beginning with This Post. However, I do not recommend jumping right into futures with both feet without some degree of trading experience. In order to build a strong foundation of understanding with respect to the Hershey Methodology, I recommend beginning your Journey with Equities.

Although all methods do contain overlap, I feel it is best to start at the beginning, rather than, struggle through the material. No shortcuts exist. Do yourself a favor and build a strong foundation for success by avoiding the temptation to jump ahead. The market will be waiting for you â irrespective of your level of preparedness. As a result, I continue to recommend an abundance of caution â at every level of your trading education. In addition, everyone learns at a different pace. No need to rush. You have plenty of time. Please use it wisely.

Before proceeding any further, please review the .gif files located within the Determining Trend Thread linked above. If you find after doing so you still have difficulty drawing trend lines, then move to the Channels Document. The rest of the background material can wait for another time â when you need to âfill in the blank spacesâ some time in the future.

Mini Glossary (Common Acronyms Used)

FTT â Failure to Traverse
CCC â Congestion, Convergence, Centering
HVS â High Volatility Stall
LTR â Left to Right
RTL â Right to Left
LTL â Left Trend Line
RTL â Right Trend Line
Flaws â Not an FTT (examples: Hitch, Dip, Stall, HVS, CCC)
FBO â Failure to Break Out of a channel
BO â Break Out of a channel

The FTT works in any market, on any time frame (provided sufficient liquidity exists).

The goal of this Journal will be to prove the above statement by process of transference. Unlike other past attempts at Futures Discussions with Respect to The Hershey Methodology, I do not plan to separate out Beginners, Intermediates and Experts. Instead of Rockets and Icebergs, I plan to break down the methodology by tool set. In other words, we begin at the Beginner level â drawing trend lines and searching for the FTT. As we all gain the knowledge needed and the expertise required to proceed, only then will we add additional tools. I plan to add one tool each month until all five tools have made their way into the toolbox.

As such, during the first few months of 2007, the Journal will have more of an educational feel to it. I encourage everyone to ask questions, post charts, create input or provide commentary consistent with the goals outlined above. Later in the year, I plan to shift the focus toward execution. Although education remains an ongoing process, shifting the focus to the implementation of the methodology provides a logical conclusion to everyoneâs efforts.

My goal includes making this process as clear and concise as possible. If at any time, someone feels a post requires additional clarification, please bring those comments to my immediate attention. Along the same line of discussion, I expect everyone to continue the long-standing tradition of respecting the other contributors to the thread. Over the last two years, the discussion has remained relatively flame free providing an environment conducive to learning. I expect that trend to continue throughout this thread as well, and I appreciate everyoneâs efforts toward that end.

We begin by creating a chart of the S & P Futures Contract (ES07H Currently) using a five-minute time frame (fractal). In addition to price, we want to include volume bars as well. In addition, please place a 20 period Simple moving Average in the price window (referred to later as 20 SMA). Add nothing else at this time. Your chart is ready to begin.

If you have a charting platform, which allows you to manually scale the price pane, set the scale to two (2) ES points. If possible, move the entire section of price bars to the left in order to have a section of âwhite spaceâ to the right of the price bars. Extend any channel lines drawn into this area.

Using the instructions outlined in the links above, locate âPoint Threeâ Trends and draw in the channel lines. Within those channels, look for the FTT formation. Follow price from that point. Once you locate an FTT and begin to follow price from that location, look for three possible âEnd Effectsâ and take appropriate action.

1. Another FTT (Reverse)
2. An FBO (Exit)
3. A BO (Hold)

At this time, one should only monitor the markets looking for the FTT and following price action. No need for a simulator. Doing so begins the process of âTraining the Brainâ to spot the FTTâs quickly and easily in the future.

Monitor Volume changes as well during this time. This Attachment explains the Gaussian Formations we expect to see during periods of changing Price. In addition to the FTT formations, make sure you understand the Gaussian Formations as well.

Each day, I plan to post a copy of my own channels and the FTT locations for comparison.

Spydertrader. My experience attempting to trade NQ with channels is that when it works it works spectacularly well. But also that it didn't work that well often enough to make money consistently. The difficulties I found were that all too often an FTT isn't (a higher high or lower low follows), a better entry often follows a right side breakout, and that drawing channels obscures the perception of the fundamentals that higher lows make an uptrend and lower highs make a downtrend, regardless of what the highs are doing in an uptrend and the lows are doing in a downtrend. Often I think I see the method being faded because it is so widely advocated. But I do look forward to your tutorial and possibly learning the error of my ways. Best regards. Mike.

superb work and effort on your part. Your patience and professionalism in your comprehensive threads and posts to date are a blue print for the deliverance of quality information and education to the masses. Most commendable and appreciated